IEX - Earnings call transcript Q1 2018

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Operator

Greetings, and welcome to the First Quarter 2018 IDEX Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure Chief your Corporation. Accounting my Vice Michael now and President Officer is to host, introduce Yates, It for IDEX you. Thank Mr. Yates, you may begin.

Michael Yates

Vice quarter for release financial joining Good is for a a Officer Doug. press everyone. the us This IDEX President IDEX and morning, of Yates, issued first for you you, company’s Accounting highlights. and operating outlining Thank Thank Corporation. our discussion Chief and months The can period be financial we ending morning, Mike with performance later This for Web XXXX, for period. today today’s be file XX, same the the company’s our press site XX-Q our webcast, three on used during to will www.idexcorp.com. March at along accessed presentation the we slides release,

strategies. segments. is Andy and the deployment is Joining and operating an our of for Andy Bill second outlook and discuss Grogan, each The Chairman with Financial today the financial of update our quarter year market call geographies Silvernail, begin and providing finally within our performance through first Chief We’ll our and CEO; and Officer. for capital format our walk then conditions, up overview results with on the follows. me as we’ll quarter wrap the will XXXX. full And He then today

Following our questions. prepared remarks, we’ll open your the call for

our for for hours XXX-XXX-XXXX you may log ID webcast reason, number to company’s replay two conference or the access any the approximately call after the the may If XXXXXXXX, call you concludes exit homepage simply entering replay. need should complete beginning by on and to you toll-free a dialing

Exchange today’s contain language our With reminder statements that, now to that we to are the release filings Securities in forward-looking turn I’ll Before certain IDEX’s in Andy and the and Silvernail. over the that safe with and a this call call Chairman Commission. subject CEO, brief may harbor press begin,

Andy Silvernail

first XXXX for appreciate quarter morning, you everyone. our Mike. joining I Good results. Thanks, us

Let brief overview. me a start here with

the all-time the end execution We once We back of geographies sales, a year, and of delivered and we elaborate orders, gains revenue delivered across record another challenges across again nearly see Favorable in every and HST drove continue and the market of economic market and I’ll first highs experienced operating organic in minute. back XXXX quarter. all our a most quarter. improvements to income share in in subsided. have half order segments markets, the conditions in in on globe. three and growth On record EPS continued more broad-based strength the

and and company, margin revenue X% EPS a we XX%. achieved XX As XX% reported organic adjusted basis up op XX.X%, up was points $X.XX or $X.XX and growth. of order was Adjusted

efforts growth culture we segmentation the even that around a dividends customer is more continue and company targeted see our Our initiatives, with when to growth combined pay and across focused.

Our balance sheet remains very healthy.

leverage our and debt is X.Xx net debt gross is Our X.Xx.

should the capacity deploy If the present our cash next billion XX the over right you and balance flow have opportunity plus $X in cash months free our we globe, strong combine across ability revolver sheet, balances the to itself. of

about moment business do I’d to regions the what and a take across across we talk Now, and markets in. seeing like our we’re

a and Day to robust. more bill pickup continue rates signaling the our we book in business of quarter CapEx are activity in markets industrial and improve project Our saw spending.

in Scientific federal was strong the early for our to show continues and NIH Fluidics Optics latest funding the initial growth continued & sequencing indicators DNA be If you markets budget throughout cutback. business, year. IVD/BIO X.X% a turn alleviated concerns up demand and to of of

to upstream market show high continues signs outperform gas very and rebound of demand. look at continues energy with to global you markets Semicon If oil do to and energy, well. midstream continue

that we moderate previous long slowing quarter recall finished we due conditions XX% robust year orders. quarter saw a winter very with The first first ended we year-over-year. mainly the preseason but some you to the may in municipal managed opportunities the up in to agriculture, finish solid has We In continue with in very we within emerging demand. to remained markets capitalize development and see rescue revenue water up fire market investment and organic U.S. growth. new digit in The on double product in to and still

majority indices to years. region economic global Now, short, favorable The continues stable the for American to a the let’s the categories. move time In European be first the robust with The market for North political remains several in and all is promising. vast on economic geographic of outlook our positive also outlook. environment

this estimate that have impact $X see excludes on of all point but Section to settles not the remainder in This had including somewhere XXrd, of estimated specific quarter global wait in Clearly, $X is XXXX. the around In experienced Section mine. tariffs this been best of top have where based here our impact with me talk a about talking be And for the in the many tariffs the been million the let XXX year. for this and enacted we people’s of growth March the Asia economy, summary, continued about we enacted. tariff and XXX of strength on the estimate while second that there’ll have first India. accelerated question. the China in and minds the at to Tariffs million on XXXX

on We’re about and of on to our we’ll impact looking forward. our these at all and the and We’ll address alternative options customers issues sourcing also how be going our we both want consider thoughtful of comment very inflation. pricing shareholders strategies. I including

to an productivity did inflation. excellent quarter driving the team offset job Our in

to remains However, now of ahead turn to and All let on right, continue me a productivity stay it. work capital we will and to deployment. concern inflation pricing

minute me capital to to a Let commitment take recap our deployment strategy. our

continues pipeline right positions our previously capitalize opportunities. favorably mentioned to sheet as be First, to our on balance robust and I’ve us M&A the

terms disciplined However, to of as capital work possible diligently shareholders. very deployment acquisition the we’ll in we’ve on integrating our into meantime, thinXXS talked delivering In the the returns on in focus be about with our IDEX latest past many a the best times portfolio. we’ll

and to We this row five seven remains saw all strength the targeted quarters in we organic saw new across makes dedicated we a order quarters saw of a three organic in of growth initiatives. we organic terms growth, in our This growth. revenue that segments. and quarter evidence the row that where development team the growth product organic In saw

committed shares in repurchasing quarter. the not did be quarter opportunistically the of we the to we and any XXXX, we second shares remain expect Although back to in in repurchase market first

the the dividend XX% all overall XXth, FSD organic driven $X.XX. turn a quarter a This FMT puts increase on approved we on up order first half success as the now payout million end across million growth by April by segments. excellent convert Slide the had of in Board results. across our was sales $X.XX us X% was QX All XX% won’t XX% XXXX up growth overall in of of positive to X. X, market organically, orders $X.XX target growth up let’s our HST that second saw X. XXX The gives from us we was and X orders on was dividends, of until up Finally, were three to X. remainder up QX our to quarterly overall and right, the This XX%. ratio X strong high up to FSD driving three I’m increase and above FMT at all driven orders to some of in year. X% or up of organically. confidence expect the and segmentation through growth X, organic XX% XXX initiatives and segments; strength Revenue HST this was We’ve and up that continue. was of

$XX The to team of job excellent quarter. the backlog Importantly, during continues do million we’ve an executing. built

the was with flow basis higher you up income have challenges points was outside XX.X%, prior in corporate from guidance. Gross The excluding year-over-year. XX.X%, million in quarter, operational up subsided. of it associated million sales X.X to through was a and to stock to related XX margin HST million was in of X.X the The Adjusted year Our of was million $X.XX. of charges up XX%. York. HST Consolidated our majority restructuring approximately in within down points and of adjusted points more Op midpoint compared foreign driven Center adjusted primarily up resulting look again higher our taxes. due costs being impacted Optics through, New consultants investments currency, $X mainly of restructuring restructuring was pension margin margin basis flow of sequentially by continued was XX million compensation, for And XX impact of QX operating corporate in expense as basis income year. prior up also net in by XX% from both impact of robust the in income prior on than the at if increase for Rochester, that was even Gross periods. X.X XX% engineering. excluding margin and Excellence was operating XXX.X is costs restructuring EPS $XX the M&A million

February turn XX% of as pressure can of to with X, XX% and the the materials $X.XX guidance restructuring EPS customers’ in discussion Excluding X% Slide me than let if organically. FMT strong XX.X turn year. and Metering. X% to other due going and about working also to primarily up compared The both adjusted to last X% with were the the source flow. adjusted revenue in prior ensure of over points that net XX% ETR receivables. FX turn income Op you’ll to year, converted start overall, now $X.XX free drove orders adjusted impact year. tax increased I’m XX% XXXX to last were gains meet our continued in to higher disappointment X% basis Inventory remain $X.XX from to higher Fluid XX.X%, demands. the adjusted increase restructuring, over we for does All QX It up was $X.XX capital. XXXX or $XX we compared the segment overall, Sales of up million of EPS was December transaction $X.XX one-time are include margin right, Sales March grew growth. of and rate and We which month of a order That at of majority to cash XX additional of quarter. both XXX organically. operating tax reform. one was was million higher raw down & and to due to due was income

If strong year-over-year. revenue at ag, increases you with digit double it look remains

our book The remains robust we the business, for In to the in new ship in In U.S. business distribution well the rates continue industrial side, global industrial both sales importantly, improve. saw double-digit quarter as day impressive quarter was as our really well in LACT story. year-over-year. solid market. with and China And increased water, driven is our oil it a a oil and and orders product valves On market more and market for have highlight very business. had the increases pumps new to a products. our prices positioned also great And grow via energy, where in gas

aviation builds show truck strong and of seeing signs We’re recovery the segment. for drove winter the cold

on to & Slide up XX% Science move pleased Revenues overall, up X. organically. very Health first were I’m Let’s with QX were X% organically. quarter. Science. overall, Health I X% & XX% on orders the was

points last over XX.X%, it again, customers volume very performing is pleased overall than the & to expected and well, Excluding look quarter. saw points Science happy some we be where I subsided. on said, margin thinXXS first impact XXX productivity have margin that FDA XXX was mostly quarter. as op operating first adjusted going for integration sequentially very favorability segment due the strong. operational year board. expect earlier have much was to end of is approvals last discussed the to at expense, to basis of higher initiatives and we team XX.X% restructuring drove And an who the of We our them the in the year basis of closer challenges quite and the business, markets quarter the executed increase I in remained IVD/BIO with I’m If Life the how Optics The as

Orders transportation an as If on we our the perform were industrial, at the of X% be And were markets of projects. growth growth. HST overall Solutions, strong segment entire had Slide terms up multiple The I’m up organically up the seeing globally nice business and funnel market to we’re in led and quarter. market. last XX% as saw the X% Diversified, semiconductor across XX% opportunities finally organically. strong Sealing Solutions importantly X. in well. segment, you then Sealing in its within very with distribution continues a first quarter Revenues MPT group very HST well overall, look and improving

expenses, adjusted positive. quarter. XX.X% products the XXX in markets European In performing op which the strong North Excluding basis restructuring well. dispensing, markets increased points remained in very was the also Project margin activity new is with and American emerging first

& improvements and And activity the positive business, pick continue to globe muni be has expectations. margin OEM the Fire we which the is in Middle steady. seen and Akron the business AWG very across at pretty Safety, and In Looking ahead India, project rescue Brass saw and up strength Fire we’ve in China East. we’ve seen of for which remained

our revenue through saw share and program we domestic new are an order in is organic double-digit impact alloys could on wins. growth And demand of We products in new cautiously the across of on we Finally an tariffs the Band-IT. quarter. have then produced for its Most regions but finally, watching U.S. chain gains supply impact. had global Band-IT, and increase

on quarter additional with in organic operating estimating the some QX rate regarding $X.XX to X% XX.X%. March costs to XXXX to for range is on I’m for expected FX be QX approximately estimated Slide the growth second are full million. me X. Corporate In with year. and margin an X% $X.XX our to rates. line XXst for effective details with we’re XX.X% $XX be X% the and now tailwind Let QX, around conclude from be to based of expected top tax about revenue The EPS guidance the

the margin year be our is $X.XX increase That’s to the If to you range to an turn is from in is new guidance. range. of X% Full growth Full increased previous full we’ve be to expected X% organic $X.XX. to the to of full operating to expected revenue XX.X% year XXXX, year our guidance range which the year XX%. in

net based the We X% XXst expected FX on anticipated some variability in free we is remain around year the about to throughout a to But be also income. interpret could million more at to expect XX%. IRS of tax reform, see from flow tax see tailwind taxes XXX% cash and XXXX. continues rate March The full is overall be will to $XX effective strong rates. CapEx as about

be million to higher for first the expected $XX $XX the it given This is are $X we’d year. which of before, to guidance range costs corporate of Finally, number quarter. in the a in all million occurred million compared to the

And Finally, excludes let over it let restructuring acquisitions impact our pause the associated in here. earnings or With guidance or any that, questions. from from costs operator, turn for me quarter. me impact

Operator

Instructions]. conducting Thank a you. we now Ladies gentlemen, be [Operator and session. question-and-answer will

Our Please first question comes Fargo. question. of line your from Poliniak with the Allison Wells with proceed

Allison Poliniak

Good morning. guys. Hi,

Andy Silvernail

Allison. morning, Good

Allison Poliniak

I soon anything know to say on this Certainly and you of peak gives But whether to there a time is orders pause businesses thoughts any you here, conversations probably that strong in for concern any to it’s is see been that that? the really that. obviously So quarter. as lot 'XX of there’s too

Andy Silvernail

Allison, no.

think saw are saw throughout this as point. the pick actually there’s We things I But the of that things went indicate we us. atypical on slowing nothing quarter. which strength to is quarter at not up

Allison Poliniak

risk your that to are through you pricing to on this a right that that in is comments just position out you there now a feel able a from back That’s And now? at point, then be that Band-IT pass great. going the or you’d alloys, perspective

Andy Silvernail

about we year. coming We think aggressive I this into Generally, well positioned. we’re pretty thought were as pretty

lot of stuff we’re making think year productivity price and in When trying I have And behaviors a what about things the seeing a we’re we XXXX. you will Allison, to talked extended seeing the and didn’t times, at conversations get like lot front I showing If our the to we line, that now, don’t that. are internal jump been and about sure lead like inflation we of look people last remember, behind curve.

if significant what the thing seeing is absolutely our we’ve on It’s the I obviously the And What rising year prices. think in holds the becomes what would continue. growth got besides major of back terms finger overall going start XXXX that if biggest rates probably overall to in today the half I it’s conditions see this. economic inflation and story. not seeing we’re – hurt believe I here global We’re you’re Allison, up, about that of think to changes say, I could in

curve. pricing, the And about we and we committed of think ahead we’re when so as think being to about productivity

Allison Poliniak

Perfect. Thank you.

Andy Silvernail

You bet.

Operator

Robert the Please your from of question. next comes question Our from with line Baird. proceed Halloran Mike W.

Mike Halloran

morning, everyone. Good

Andy Silvernail

Good morning, Mike.

Mike Halloran

So first the could normal assumed trajectory here? in the guidance, this little just what’s from on from current Andy, bit side? kind on pretty assumes sequential you levels, revenue change one a Is guidance any about direct just guidance in revenue talk in of the

Andy Silvernail

not No, really.

look you that what we of necessarily numbers in this in here kind line the see we of on assumes right. basically then hold from at is If don’t And fall sequentially kind based that it it, just acceleration comps, point.

of year, So more we’re and not What from here. a to deceleration. the historical or accelerating things had if into Last business acceleration you abnormal in that don’t bill book that second see activity. get expecting the half We year. the we’re and at year things an normal expecting terms rates, of pattern pattern is overall holds project because were look last weaker

Mike Halloran

side, then the with elevated for sense. related of costs M&A a expense corporate a actions. in the now deployment to row some consulting on And capital quarters Makes couple of

the about happening that start market feel more you coming on? Any there actionability Maybe a opportunities be rising there You’re work at talk point? seen Is in. great. private the can this all? robust on of multiples the you We’ve Are side at public little would color talking pipeline that a about pipeline.

Andy Silvernail

Yes, me start so let there, Mike.

private preempted in matter what a a as this of preempted unusual, had meaning some call elevated to in would they’re deals at lot coming of market quarters. are of preemption, no, We’ve that I us behaviors seen We’ve fact in, bids. XX% seeing So XX% prices. tell last of at a two I’d are the folks multiples being that of lot terms who marketplace in out the say stage the

careful So pretty we’re around being that.

multiples bit markets, see doubt private the continue expect little that. that will Now obviously if markets, no itself I you to the in show a compress public do about in

thing, terms things that got In of of that certainly that fit category working the actionability, other some into now in terms on we’ve of actionable. we’re

But And line. now so seeing it’s we of not mostly whether or are cross the which a matter we’re can options.

seeing now. not of private right a lot We’re stuff that’s

So out. you that works how know

things to going We’re makes but and shareholders are a and that our that we few sense our across us work them I definitely would for the we’re and that for parameters looking can line, actionable. if call within get working on at there

Mike Halloran

Great. Thanks, Andy.

Andy Silvernail

You bet, Mike.

Operator

comes Our question. your Markets. from line proceed with Capital of RBC next the Please Deane with question Dray

Deane Dray

Thank morning, you. Good everyone.

Andy Silvernail

Good Deane. morning,

Deane Dray

buying How benefit IDEX-specific. is versus through some might to reform just how And the all at if moment tax kind IDEX-specific go how the would macro wondering the a of customers much we to geosynchronous navigate of could. the want willingness today? and the product Andy, your us spend. behavior So then here like with year change introductions? were of new macro thoughts back you to conversations We beginning describe you’re growth initiatives, much seeing and

Andy Silvernail

Sure.

CEO, So on time globe, terms as been as good in my in as side, this macro of the it’s growth is right. the across

doing been. as been job, years it’s So in I’ve seven it’s the strong as the that

positive. So that’s obviously

mix CapEx. terms good turn the very that In between and what’s and cycle making it’s a short of business improving book up,

But that. thousand taxes in the most played in get an involved for cash say mega We’re are in I U.S.-based role for a seeing think pay X flows change the the those still tax to meaningfully really we reform seeing globe And those Obviously in improvement hundred don’t across areas. the in projects a million, companies increase who you – or that U.S. kind of things are part. couple you’re has

that in so that’s And a regard. certainly positive thing

the In IDEX, for the half seeing view couple us. think about that those, in being a track about terms we today ourselves. or we’re handfuls a still handful and we we where of come we programs we’re track strength that half underlying markets, the differentiated growth from getting as And or the underlying as benefits markets

seen that’s And and basis both up production a goal a you that doing for our us. you lot we suggest above last And sign as so in that cyclical lot a industrial XXX on and kind are that. always numbers underlying much has said and of us we’re guys know, down. And be to – I’ve want very we of the the the compare of the good we’ve north less to points folks

the So a organic given feels when X.X% of good X% kind I production, industrial X.X%, pretty look that like at numbers number.

Deane Dray

And That’s is this when really you as color. or as say good good seen. you’ve gets as good it as

Andy Silvernail

as been, yes. it’s good As

Deane Dray

spook been, was as the this phrase you’re watermark. week. market a the saying good Yes, high that it’s not that is last That

Andy Silvernail

Yes, that know you And there’s suggest that. me. nothing

overheated of then of On just end. to the skeptical. bit and have and with IDEX across the deal combine to tend ability we be that more right and little the people, again about – when having worry now what interest thing then And getting with globe inflation rates happening what’s a that back specifically, to that most what’s do happening global on economy the in is to are terms scale I supply I I both

our of on when I this what growth. we and would those some eye obviously kind stop geopolitical expect deal IDEX control that is that thing that to think event So with can all should But I crazy with. any can’t of think keep I the deal borrowing

Deane Dray

then the slides the commented introductions. on municipal you spending? specific, was talking the can the or new in And And it. about company business address you market, What just there? Got contribution water product

Andy Silvernail

be pretty pieces. Yes, break if you’re good to but talking two continue me markets water that the into specifically, let

and ongoing that story. tied So businesses kind any at good are those new product are we equipment that overflows. you a if have coming U.S. look stopped services But as business our current are in look for has our development, penalties example administration an surge the to that effectively you at of

so a for There’s is regulation being is it. no the about that net And amount enforced interpreted business. how negative doubt and

good would good. And federal tax are say government I receipts is a so the the in overall of because muni spending enforcement terms is market negative.

I the kind going it’s steady for it to mid-single digit, digit year. think of low the be So of balance just single a here call to

Deane Dray

Thank you.

Andy Silvernail

bet. You

Operator

Our proceed from next the your question line with comes of Nathan Please question. Jones with Stifel.

Nathan Jones

morning, Good everyone.

Andy Silvernail

Hi, Nathan.

Nathan Jones

probably this Andy, were of I pressure you talking think Can of at how you about even up all, bit in face years, of talk they’ve of we got this over along IDEX about you’d in margins. think when of level, or your come that kind with talked couple XX, about would this changed could a kind inflation? you thought what, organic for better inflationary don’t growth into the terms last I if if little incremental incremental do the that, you anticipated it. margins expectations perhaps

Andy Silvernail

I term in you what said that. if back could comments, go recall, think and those I Yes, at of some was look you see the you short

XXs which because you we is XX from about the number. you if adjust accelerate that spending if impact, I that the a see engineering. just off would growth you and pop for don’t is second. right? specifically around reason going you’re far FX a up, you’re obviously I to making we’re not keep high that wouldn’t say let’s So the very were that saw So amount neutralize think just see the for think don’t FX of I going incremental – investment for to see

our aggressive pretty been of we’ve so spend in our and terms aggressive of engineering pretty terms And in CapEx.

think XX% to I’m that happy range basis, really we’re on XX% so And in consistent if a I Nathan.

Nathan Jones

there’s need and footage to XX in I easier to of terms capacity like know bricks XX is is in that of anything ramp in up of of in to always if the labor it it’s down. mortar ramp than deal or for terms that with any you maybe IDEX square of to demand engineering in or additional even kind been terms Where this have next opinion months? the or terms of

Andy Silvernail

call capital and machining those it allow to they’re meet – we capacity, us The around the but big requirements square in footage making there investments we’re pockets to here have I’ll that not those demand. and things and

you people we’re in machine we material faces availability think two in chain, seeing of of world is the skill today footage bookings with Those So of in need causes side issue double around kind face to are guys watch very, as start I of this and you behaviors capacity, pretty start what in Obviously, issues constraints for they what happens where the we that cycle times shape. watch biggest like things very two obviously and square the aggressively. The supply so that a what and is you’re more getting need seeing chain out think – just order kind then what you back ramps need good if and to And has supply that out world. everyone labor. certainly around environment than around the is for ugly. is and much ramp Western just people the the longer which it you’re that to areas Western – lead of

that so have our of And all of is you And on it happening. spikiness finger in see the need you very see us markets. to pulse think when I specific really

And looking so what for. out that’s we’re

bringing ramp term skilled more call can investing is done do terms investments skilled machining semi-automation. have the is That and resource. you programs labor, training the are there’s labor. nothing pace. that going I’ll finite about that minimal a into short we’re we In at will in investments the more look, that on trade schools, help a The What of are capable to in what going

for places we of few hire but on. nature the certainly because skilled and We’re automated us And that’s real by But the we except of almost able heavily be and be of more to that’s we bottleneck time necessity mix. to capable would won’t are for we that’s labor, nowhere more a way everybody. love spending out and something are the for a

Nathan Jones

very Thanks helpful. much. That’s

Andy Silvernail

You bet, Nathan.

Operator

of Our question. comes line the next question with BMO Please Capital from from Markets. Scott proceed Graham your

Scott Graham

Andy. morning, Good

Andy Silvernail

Hi, Scott.

Scott Graham

doing? you guys How

Andy Silvernail

Good.

Scott Graham

of to My you question what your expect around the Xa really kind X and is and year? pricing be the price What in quarter cost. was it for do

Andy Silvernail

ramp X.X – to So was on. goes we we point to the between for point as expect which year a quarter the were that actually

the upon go be I we And that pretty we know, end year inflation where to that very close generally capability and That Scott, is. as where out would a assuming guess, think that’s have areas point. have we’ll that pricing well have very actions good with in don’t flexibility. targeted we depending aggressive to my you more

there. expect that I fine So we’ll be

And our inflation it neutralize When do but that’s continuing productivity with get get through. get kind to you is we’re great always has try We magic and price equation that, flow that a that’s been and don’t so how of let what the to equation. you year. this always goal

Scott Graham

Yes, understood.

Bill Grogan

spread, I’d maintain been relative The able the that is this Scott, only thing we’ve add to is spread. Bill. to

We inflation up said, of increase. Andy expect as balance the to price ramp do as expect we our So to the year.

spread that maintain is the rest So our of goal XXXX. through to

Scott Graham

Okay.

X, are are the on to in come? getting price that increases pricing still those or So up to from

Andy Silvernail

In.

Scott Graham

out if neutral productivity, cost And negative a maybe for you you price this was quarter? think separate were little Okay. now you to you do that were or

Andy Silvernail

positive. it’s No,

Bill Grogan

positive spread. No, a it was

Scott Graham

That’s all had. Thanks. I

Andy Silvernail

Thanks, All Scott. right.

Operator

from of the your D.A. question Please Davidson. next line proceed Summerville Our Matt question. from with comes

Matt Summerville

Good Thanks. morning.

Andy Silvernail

Hi, Matt.

Matt Summerville

I’m bit sustainable pretty profit on upside the you HST. a here talk you more back there’s You question or of at transpired and Can to look will, and mentioned FMT if breakout HST? wondering about margins. to want if year similar nice to operating I and you I in a two that that? what’s pertaining driving it’s A feel kind a little A playbook, what to guess hand

Andy Silvernail

So the you got things if follow or in years. last a of that few the over here handful have years in that that pattern kind you last pattern the few forward happened going of HST follow

optics that we’ve improvement in rates the The first seen one is very profitability significant that growth business. in business and very,

for And that’s big so a been win us.

U.S. isn’t – up business the substantial a be big that that for going and Sealing to and year, pretty a as our got Bill, of as you in years don’t investment know, I to in scale this know, was we Second, it? here that’s made a drag business couple a

Bill Grogan

For to basically XX million. X

Andy Silvernail

Yes.

line you And sort And at component terms that fleet to it now across table so last just year you three the in margin of up cleaned then of margin a operationally. you I’m the the that out that of to same look volumes. the kind back the completely time. with benefits of segment the has as goes it’s variable company over of egg really – company. And kind average of negative an period from if several material. know not quarters not we left in year, and on there have dollars of million throughout the half it’s that’s we of but kind last laid of say in we had get finally you that way. the then And HST, It’s of going

good number. I that And so a being volumes assuming is that sustainable up. about feel that the good hold XX.X

Matt Summerville

That’s Thanks, Andy. all had. I

Andy Silvernail

Thanks, Matt.

Operator

with line proceed Winoker from from of Please UBS. question next Steve question. your Our comes the

Steven Winoker

Good Thanks. Andy. morning,

Andy Silvernail

Hi, Steve.

Steven Winoker

a if Look, guys this you you – and you’re and And obviously run flow firing into you all so cylinders talk go the cash on it receivables could mention initiatives front? quarter the just there around detail mostly Maybe there? lean. is pretty inventory point. But about the little on more did demand

Andy Silvernail

plays and balance so you inventory that scrub Yes, sheet, out. through how it’s receivables all the see if you’ll

than or in call was $XX in So and as I my more remarks, more March million mentioned December the February. than prepared

so inventory of the And just And on that. is in that side, here is nothing kind about can do just the That’s up March bullet reality. you [ph] about a sure We of most that that receivables making of showed position but serve we’re bit to not end to year would did in that prefer a from it did jump have happen. seen – our customers. you’d not a see that

see don’t And through so the majority issue. problem vast a of when as you as the the it being put it that’s year. I go altogether, we cash

Steven Winoker

year. So numbers the you’re for your able hit to full cash

this to XQ? catch expect in You up

Andy Silvernail

will think be tighter. a little I it

Bill Grogan

did safety balance inventories, put we little sure Our think are to more stock it to stepped will chain I bit our we’ve a make guidance, through the up receivables slightly take sheet requirements. launch the we to again customer able down within I as supply but think meet

we the will this there’s current bit through bleed at level. but a will build I as go year think inherent remain little that inventory volume

Andy Silvernail

plus income. at that net But we’ll of XXX% be

Steven Winoker

on way Okay. And carried then underlying getting just changing these any a you’re now? you quarters the IDEX drivers the the you’re the complexity the business about longer company, company, as for term the is what those side, of exceptional kind too seeing perspective, Andy, we’ve of RD&E talked growth how through profile right for in the going Without see things shifting model kind away, any of years. of

Andy Silvernail

at would is over I to becoming soft if half in if time market. and we’ve or been peer deliver things ability 'XX 'XX, In actually that rising you versus above. last able the markets. a you think in consistently and I 'XX were of group, actually back our a to And go and when more Steve, demonstrate even look go back year we were confident what the I’m our growth say in rates

we’re to our going basis above say I’m points delivering three – plus we’re couple that at growth. years hundred So market into

we in can as is consistently organic plus I like first confidence been because level answer high more my as know there my that which huge you guess is business. to our for is it’s is a do growth So us, as nothing that you

five or there. And this go down very what does on to And know, for you you – you north our go was It’s barring of it’s measure, if look at at sort of And XX%. up and And we’re things M&A, it at six And is our on right up look as invested one organic growth close and XX. any If defensible go of you how years, year that huge we return to that’s return we’ll capital. time. invested capital. over growth end the really and XX%. here math to if driver you a back do

really we’ve segmentation model. continue targeted I off the So on we’re done, to and the on investments paid growth this think and going around those bet have to just heavily segments

Steven Winoker

Okay, fantastic. Thanks.

Andy Silvernail

Steve. Thanks,

Operator

from comes Please Oppenheimer. question Giannakouros of from your line with next Our question. proceed Jim the

Jim Giannakouros

Good everyone. morning, Hi.

Andy Silvernail

Hi, Jim.

Jim Giannakouros

that? that watch a just up Do restocking heads potential. us on in Just going something or suspect any you accelerated seeing gave anywhere happening on the a watch that’s as a you follow Are that item you – a item, classifying that vertical forward? up you were just

Andy Silvernail

back of on are I and to is markets really get put analyst and obviously willingness of from seeing freight investment pay don’t ordering, to where I a The premiums line. ago, But hat this my acceleration it Yes, and back see but behaviors in problems happens; if one to time absolutely to see you inflation, yet you’re that long today place Jim, that biggest double got that. go around XX-something-years is right, is the the this the logistics. in –

you If to look to and is for lead out that it’s get freight seeing very railcars, you’re at logistics me extending times hard availability.

around things it’s the the to So that very where out see It’s in course there in numbers. much and think it get very the where could there caught hard see world people like good metrics is measured. you’re where flatfooted. of specialty easily I to see starting places capacity there specialty finite and alloys, all aren’t We components, the

it intensely seen it. for yet haven’t are we we trying watch but so And to really

Jim Giannakouros

you isolated have I events. the spend. okay. suspect may that XQ Thank step costs the And it, I been Got said that you. to M&A believe corporate on is up surprise

the know at if accelerated you that fell diligence – a some of or due through and You I’m hour? reflection Was deals you mentioned tires kicking that what, maybe just is right, XXth consultants. the the that

Andy Silvernail

too, clumsy a it is. role it let we this tax I’ll played it spend but new pretty in understanding to as in talk Bill but that’s did more code. It’s

with guidance. know, out you it rolled they’ve As zero

had that. expedite we’ve of so our And understanding to

we so I comp small in don’t But Bill, stock Bill? of There costs, more number the a were got coming quarter. wasn’t a And think bunch items. there. of

Bill Grogan

would costs. it stock spaces we related that within majority obviously the the increased last just of about. as the comp. then I primary to piece corporate and Andy was tax reform continue to so look stock driver talked was M&A I say a then was at the of was think Yes, But up X% And

Jim Giannakouros

Okay. may. I Thank And you. one more, I can if if in sneak

guys strength, broad-based for You that obviously heard quarters. now we’ve several

we lifting – all boats, your If a any XXX% so still give tide percentage performing is at to not or via that you revenues can speak? vis-à-vis or expectations. top are line the Is are or either that certain update you margin call standards to out areas to used Thanks. of initiatives us happening growth rising or

Andy Silvernail

of equipment there. business, enforcement a look bit water have of we again got if You’ve one at lack sales that. stands really you that stronger whacked kind the but some to our pockets little is it has out overall The expect

and the is the just really Now doing service business is well exceptional. team

is with. a that’s we’re one so with dealing on But couple the reality And of very happy that I what they’re things. pocket think interesting

Bill Grogan

and Andy guess go led the mentioned, fundamentally out. there’s timing across but price nothing portfolio we issues some like as some sticks I

Andy Silvernail

Yes, there’s of that’s really kind ugly. nothing

soft in quarter to been a of been was the work that the quarter in But China that had and the and the was years. back our here our real prepared highlights as in of XXXX didn’t business double-digit performance for remarks. growth One in about in talk through China. has gone done for while really I China couple our and segmentation that had soft we a our

to back. it’s so nice see bounce that And

Jim Giannakouros

Very helpful. Thank you.

Andy Silvernail

Jim. Thanks,

Operator

next comes your from Our of question from Humphrey. the Please Robinson with Charles Brady line proceed SunTrust question.

Patrick Wu

is This Thanks in everyone. my morning, Good questions. taking standing Wu for for Patrick actually Charlie.

Andy Silvernail

Hi, Patrick.

Patrick Wu

nice quarter. digits It’s see Hi. double growing Diversified to in dispensing within the

that that to at with new we from? specifically the little the of and Any flat to dynamics positive year. dispending was coming were talk a coupled back doing the bit was out that going just there of then something more Is Can it IDEX Is some helpful. being What’s be about some speak think mostly would really on the little growth commentary I end Just for sort America a this products it that’s quarter? organically? North last that market? color quarter’s of

Bill Grogan

sales of I Patrick, I from first second one half. recall if would year say half that last could and take orders one. to dispensing’s you thing shifted pacing

their one is second launch really I and they at regions is half against then globe comping products first think start. also did in each been And easier component. across successful it’s thing the the an have the those So of new

sales timing also they’re plays then just introduction going combination a part. think way year the of I this new last they fall of a versus So year products and to

Andy Silvernail

time. innovation, there positioned I complexity Patrick, into at their look had has we at advantage two and add, even really market have years. these the as of you’re to around refresh frankly XXX% just Their segmentation globe we’re to the And run themselves well the folks if It’s work share looking share almost product Bill are think have line they that over resources places out, about, last team, can we to take maintain far dispensing IDEX And and the market over our The growth you impressive. the that talked an around where more child driving how we reallocating for team and leader just turning accelerate incredible and away and share very trying are consistency and position broadly. continuity. more to poster really

Patrick Wu

color. Great. That’s great

XX tariffs X that of million or I preliminary still just think mid-XX% regarding coupling And guys moving something last that with in to you guys that comfortable let’s you pricing an margins, are spoke want the question. term. like the with commentary something gross ahead to pair obviously about next, say, over you talked the about that medium earlier that impact on guys quarter’s in million monitoring Is to months? it with X Just you’re I XX the

Bill Grogan

you should think our the what barring for profile changes. first quarter is significant any of I the year, the Yes, balance margin in expect macro

Patrick Wu

And have you guys about. with now that’s preliminary that the talked tariffs inclusive

Bill Grogan

correct. Yes,

offset spread. about any that to ramping of As price talked our maintain earlier, we’re to we

Patrick Wu

you. Thank Understood.

Andy Silvernail

Patrick. Thanks,

Operator

with comes Partners. question of next Linzey Vertical line from Research Our the your with question. proceed Brett Please

Brett Linzey

morning, Good Hi. all.

Andy Silvernail

Hi, Brett.

Brett Linzey

pickup. your to on just I CapEx circle comment the to Andy, want back

good maybe close light-type a product now. pretty markets that of that broadening activity capital you quarters comments? are few it are pretty a or a – then on a for coloring those had Could seeing you to And that lines You’ve point few is particularly since ago? put a quarters really pulse finer out just

Andy Silvernail

around really handful our targeted it’s Brett, initiatives. a growth of

in been at had if base an industrial parts look in businesses So business got, are has some we’ve a where into important. couple you we’re put accelerate that which that capital then we putting going outstanding run call And here, places particular capital. where pockets we’re growth really to our just business think can has we’re more which it seeing Viking meaningful some the dozen that

things extend of by go hands times biggest won’t Candidly, is with on. kind time our I lead CapEx them equipment. myself spending But one. that these So one Bill are through the seeing and challenge that are Ashleman the Eric we and really with have

So talked the same the relative is about with lead time that supply phenomenon we’ve to chain equipment.

I and frankly stuff. So get our it’s just by to to would did constrained quarter we the than have ability loved spent in more have

Brett Linzey

capital and guess That’s I work helpful. from a more break more CapEx standpoint bit. customer a free little maybe starting project to And

in comments made remarks. prepared You the some

more little color a there? Just

Andy Silvernail

process seeing that the in on process put industry pharmaceutical. side. the and it industry gas, oil And has definitely chemicals, You’re now food,

those dollars few seeing released. see in now you million not a pieces were talking starting for are Again, that XX a hundred seeing eke but just out you’ll accelerate. go we’re see You’re if being and couple to larger things those we us we’re those. it’s thousand But – to more them back huge and months,

Brett Linzey

is you very strong and leverage that but mix, of how more. that things one this incremental, margin in just guess maybe driving the entitlement there into quarter there XXXX? the how look this on and we is then other sustainable I balance And operating great. view Is margins of as do FMT Okay, type Yet another year business?

Bill Grogan

maintain within as digits, we’re in first quarter the growing I at So we’re pretty profile should of balance to if be think Again, the in the the here the or through year. year. mid-single march FMT we consistent expand able

Andy Silvernail

and our highly things what back that had been that has And was went businesses. now XX seeing of profitable as that And calls generated think is something is of in fixed performance profile I XX years happen of businesses as contributor not those our realized held or couple so had the seen you’re months really or as out the was of some of some that industry be historically the you’ve right, of one the profit those. did you visible volume businesses that a last if coming we particularly what recall, the ago, months not said you accelerate. improved, over margin ago, we profitable if we people so as don’t would I And recession happened, we higher

pick – a up seeing you’re so a and And nice nice been change. that’s

really And on dictated going so be feel it’s I don’t to volume.

up, But be other hold no the hold of obviously wouldn’t than FMT volumes to reason we’ll if the why parts there’s So more up. business. margins sensitive volumes

Brett Linzey

appreciate I it. great. it, Got

Andy Silvernail

Thanks, Brett.

Operator

proceed comes from question. with question Giordano of from Company. next Please Our Cowen your Joe the line and

Joe Giordano

guys. Hi, my for taking questions. Thanks

Andy Silvernail

Joe. bet, You

Joe Giordano

your differently exposed a what about view bit little next getting like an pay those more Andy, on be timing and year, to the at concerned you that to over for how looking into that more has how inflation and views you’re something there? changed on that might M&A watchful businesses you’d like much or from your standpoint? Are thinking those that

Andy Silvernail

have at amount We that businesses huge that inflation not issues tend inflation. – have relative of look to to

that So a lot cyclical have businesses looking at or from direct inputs of heavily we’re materials. base not

over prices conversation positive a are a like may people us very, very cost literally just They at single things skeptical than I below buying over And more the years that’s kind at how think digit kind time. long-term of you of the And I buying been be we them, period that reality things if probably NPV that being looking looking the bunch so people we And then businesses we’re time. but paid value looking are at you’re at – look capital. buying some of of value avoids of generally. have look where on ROIs businesses why over long

good reliable the is able skeptical. with value, really we get one our that. of to the do to flows of I’ve so and just feel of more those range about much type And And ability because look, the cash beauties defensible, being comfortable are model been of business a pretty to so

you unless years, very frankly over really, view change the unless think really much. of differently, it at look to doesn’t you point going next change is so XX something And really inflation our

Joe Giordano

Cool.

approval revenue mentioned your for expect does that the of last of FDA. from for you’d in you a had earlier growth quarter how deliver get Was some HST And early that the you cadence the kind on Okay. plan year? pull-forward to from customers or me, the change

Andy Silvernail

just don’t I increasing think a there. little would those two of a and changes a thought. we bit matter This it we’ve years. happen about, was than baked stuff happened we’ve It bit approvals much. in they been sooner gosh, Obviously, when guidance little it on that revenue for is of talking

Bill Grogan

quarter We back XXXX. into the got first the year in order starting of half the shippable continuing

Andy Silvernail

we maybe quarter A thought? two or than better

Bill Grogan

Yes.

Andy Silvernail

So not Joe. material,

Joe Giordano

guys. Thanks, Okay.

Andy Silvernail

You bet.

Operator

Kearney your of next Our the with Brett from with line & question. Gabelli proceed question comes Please Company.

Brett Kearney

Thanks guys. questions. Hi, for taking my

Andy Silvernail

You bet, Brett.

Brett Kearney

just front months the on size what billion will XX or acquisition you if there? will, undertaking Just available be deploy the want X to guys firepower, you over comfortable ask next roughly what the size of to range

Andy Silvernail

us to – XX of that For million us. right is is XXX alley for kind million anything the that’s down

be And do down at super There be the love that certainly we substantially going of and some kind we know are the know But it’s bigger. looked straight right we have run. at fit going businesses out reserve to model that that to and and comfortable. how we’d things to we look we So to are the center. It’s that.

million of expect in to most many XXX world value part us. enterprise for very should you there from out the in are but is but few, aren’t there so And there the a those XX what million

Brett Kearney

Great. Thank you.

Andy Silvernail

Thanks, Brett.

Operator

back I’d no call comments. management further in like closing queue. hand are There to questions for the the to

Andy Silvernail

all to and our team and customers continue very people who well. time really and people are running business congratulations. the that execute I’m the proud of IDEX the I importantly thanks you to we well this for exceptionally within within part taking and IDEX deserve think to the to be most Thank just

here time in to us look Take your being and with care. you XX forward days. appreciate talking I to So

Operator

you this and today’s your Thank participation. Ladies conclude gentlemen, does for teleconference.

day. your at this and may wonderful lines time, a disconnect You have

IDEX (IEX) 30 Apr 182018 Q1 Earnings call transcript